WHY PEOPLE LIVE IN SUBSTANDARD HOUSING

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1 WHY PEOPLE LIVE IN SUBSTANDARD HOUSING October 4, 2018 Jessica L. Yorko, B.A. (Economics & Environmental Studies) Ingham County Health Equity Coordinator

2 Events: What is happening? 22% of homes in the U.S. have serious health and safety issues, such as gas leaks, damaged plumbing and poor heating. Data sources: U.S. Census Bureau Current Housing Reports, Series H150/09, American Housing Survey for the United States: 2009 U.S. Government Printing Office, Washington, DC, U.S. Department of Housing and Urban Development American Healthy Homes Survey. Available at: portal.hud.gov/hudportal/documents/huddoc?id=ahhs_ REPORT.pdf U.S. Environmental Protection Agency Performance and Accountability Report. Fiscal Year Environmental and Financial Progress. (document 190B09001)

3 Events: What is happening? Case study / example:

4 Events: What is happening? Rent in Michigan averaged $844 in The average hourly wage of renters in the state was $13.70, several dollars below the $16.24 per hour they'd have to earn to afford a market rate unit.

5 Events: What is happening? Buying a home today is the least affordable that buying has been in the past 8 years. Home price appreciation accelerated in recent years. Wage growth turned negative. In 2017, mortgage interest rates went up nearly 50 basis points from a year ago Q U.S. Median Home Price at Least Affordable Level Since Q Median Home Prices Rose Faster Than Wages in 87 Percent of Local Markets; 45 Percent of Markets Less Affordable Than Their Historic Norms, an Eight-Year High. (June 27, 2017) Report by RealtyTrac

6 Data and Trends Housing Tenure Who experiences housing problems in Michigan? Total Number Experiencin g at least 1 of 4 Housing Problems* Percent Owner Occupied 2,728, ,085 12% Renter Occupied 1,112, ,300 52% All 3,841, ,385 23% Renters in Michigan are 4.3 times more likely to experience housing problems than owners in Michigan. The four housing problems are 1) lack of complete kitchen facilities 2) lack of complete plumbing facilities 3) overcrowding 4) cost burdened. Data source: Comprehensive Affordability Strategy data of the American Community Survey, year averages.

7 Data and Trends What are some characteristics of renters in Michigan?

8 Data and Trends What portion of new households are renting in the U.S.? Graph provided by North American Real Estate Investment Trust, 2015 NAREIT Market Commentary

9 Data and Trends What are homeownership trends in Michigan? Homeownership Rates in MI: Highest at 77% in 2006 Lowest at 71% in % 2017 Graph provided by Trading Economics Data source: US Federal Reserve.

10 Systems Structure How are the parts related? What influences the patterns? Diminishing rates of homeowner -ship Declining homeownership rate puts pressure on rental housing markets, driving up rental housing prices. Rent increases in Michigan outpace wage increases. Renters in Michigan are 4.3x more likely to experience housing problems than owners. The scarcity of rental property in Michigan allows rental property owners to keep their properties rented out regardless of the condition of the property. Rental property owners have little incentive to make repairs.

11 What else is important about homeownership trends? Homeownership rates in Michigan by racial and ethnic group White 78% Black/African American 45% American Indian and Alaska Native 58% Asian 58% Native Hawaiian and Other Pacific Islander 54% Hispanic/Latino 58% 2010 U.S. Census, General Housing Characteristics

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16 Systems Structure How are the parts related? What influences the patterns? Racial disparities in wages and wealth persist in the U.S. As a group, Hispanic/Latino, Black/African and Native American people in the U.S. do not have the same home-buying resources as White people. People of color have also faced historical & present-day barriers (institutional racism) to homeownership. White people in Michigan are 2x as likely to own as Black people, and x as likely to own as Asian, Native and Latino people. Without equity in wages, lending and access to homeownership, people of color will continue being forced into increasingly scarce rental housing. White people are becoming a smaller portion of the total population.

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19 What values, assumptions and beliefs shape the system? 1. That the rental housing market is competitive with little or no collusion or concentration of ownership. (MYTH) Gilderbloom, John I. Socioeconomic Influences on Rentals for U.S. Urban Housing: Assumptions of Open Access to a Perfectly Competitive 'Free Market' Are Confronted with the Facts. The American Journal of Economics and Sociology, vol. 48, no. 3, 1989, pp JSTOR, JSTOR,

20 What values, assumptions and beliefs shape the system? 2. Compared with renters, homeowners are better citizens, neighbors and persons. (MYTH) This belief can be traced to the very beginning of American Culture. The dominant view of the colonists was that property ownership was a good indication of a person s moral worth. In fact, tenants were not allowed to participate in federal elections until 1860 (Dreier 1982).

21 What values, assumptions and beliefs shape the system? 3. Anyone who wants to improve their life situation in the United States can do it, if they just work hard enough. (MYTH)

22 TRUTH: deep inequities shaped by historical and present-day discrimination

23 QUESTIONS?